TRIPURA BUS SYNDICATE v. STATE OF TRIPURA — 1996 DIGILAW 146 (GAU)

JUDGMENT S. L. SARAF, J. - This writ petition is filed by Tripura Bus Syndicate, a body registered under the Trade Union Act having its registered office at Agartala, through its General Secretary. 2. Petitioner by this petition is challenging the order passed by the respondent No. 1 under sanction Memo No. 1764-63/F.4(8)/DM/W/ACCTS/89-90, dated February 20, 1990 and Memo No. 1764/67/F.4(8)DM/W/ACCTS/89-90, dated February 20, 1990, being annexures 4 and 5 to the said writ petition. The petition discloses that during Parliament election of 1989 a large number of vehicles were requisitioned by the respondent No. 2 in exercise of the power conferred upon him under section 160(1)(b) of the Representation of the People Act, 1951 vide Notification No. F.14(2)GA/77, dated November 30, 1989, issued by the respondent No. 1. Pursuant to such requisition orders a large number of vehicles of different categories belonging to different operators were produced before the District Magistrate and Collector, South Tripura, with the driver in the running condition. The respondent No. 2, issued instruction to the driver of the vehicle and asked them to take delivery of the Log Book for the purpose of noting down the mileage of the vehicle. According to the petitioner the rate on account of hiring of the said vehicles were fixed by a letter dated November, 8, 1989, issued by the Chief Electoral Officer. The said letter November, 8, 1989, reads as follows : "GOVERNMENT OF TRIPURA OFFICE OF THE CHIEF ELECTORAL OFFICER No. F.3(42) - CEO/89(LOOSE)/75-53 Dated, Agartala, the 8th November, 1989. Sub : Fixation of rates of hiring charges of different kinds of private vehicles in connection with Lok Sabha Bye Election, 1989. The Government of Tripura has fixed the rates of hiring charges of different kinds of private vehicles to be used for the ensuing Lok Sabha Bye election, 1989 is noted against each. Type of vehicle Rate fixed 1. Jeep Rs. 3.75 per k.m. plus detention charges of Rs. 295 for every 24 hours of proportionate payment for part thereof. 2. Ambassador/Taxi Rs. 3.75 per k.m. plus detention charge of Rs. 265 for every 24 hours or proportionate payment for part thereof. 3. Trailer Rs. 80 for every 24 hours of proportionate payment for part thereof. 4. Bus Rs. 6.40 per k.m. or Rs. 900 per day or part thereof which is higher. Night halt for bus would be Rs. 295. 5. Mini bus/Matadoor Rs. 265 for every 24 hours or proportionate payment for part thereof. 3. Trailer Rs. 80 for every 24 hours of proportionate payment for part thereof. 4. Bus Rs. 6.40 per k.m. or Rs. 900 per day or part thereof which is higher. Night halt for bus would be Rs. 295. 5. Mini bus/Matadoor Rs. 4.00 per k.m., plus detention charge of Rs. 350 per 24 hours of proportionate payment for part thereof. 6. Trucks Rs. 5 per k.m. of running without any ceiling limit plus a detention charge of Rs. 610 per day. Detention charge of Rs. 610 will be payable for all days, the truck will be on hire including the day or which it reports and the day on which it should be released irrespective of the hours of such reporting and release. The cost of fuel will be borne by the owner of the private vehicles. The above mentioned rates have been approved as a special case only for Lok Sabha Election, 1989 and is valid up to 30th November, 1989. The cost of fuel, etc., is to be borne by the owner of the private vehicles. This is issued with the concurrence of the Finance Department vide its U.O. No. 3771-Fin(G)/89, dated November 6, 1989. Sd/- N. G. DAS 8-11-1989 Chief Electoral Officer, Tripura." 3. After the election was over the said vehicles were released with the transport operators and the owners and they were asked to present their bills to the respondent No. 2 for payment of hiring charges as per the rate fixed as set out hereinabove. Thereafter, the respondent No. 2 made payment of the hiring charges to the truck owners and/or operators at the rate fixed. However, while making the said payment, certain amount was deducted allegedly on account of 4 per cent sales tax holding that the same was payable to the Commissioner of Taxes, Agartala, under the provision of section 3 of the Tripura Sales Tax Act read with Rules framed from time to time. 4. Mr. Deb, learned counsel on behalf of the petitioner, has argued that the petitioner at no stage transferred the vehicle or any right thereunder for any purpose to the respondents. The vehicle at all material time remained under the control, supervision and ownership of the petitioner through its driver who was the employee of the petitioner. 4. Mr. Deb, learned counsel on behalf of the petitioner, has argued that the petitioner at no stage transferred the vehicle or any right thereunder for any purpose to the respondents. The vehicle at all material time remained under the control, supervision and ownership of the petitioner through its driver who was the employee of the petitioner. At no stage the respondent, i.e., Electoral Officer, put up any plea of ownership of the right in the transfer of the said vehicle before the owner or operators. It was only understood that the order contained in the requisition order only requisition of the said vehicle for the purpose of inspection of polling stations and transport of ballot boxes and polling personnel to and from polling stations and for transport of police forces for maintaining law and order during the conduct of election. As such the operators and owners were asked to place their vehicle for transacting the aforesaid purpose and rate was fixed soon thereafter by the Chief Electoral Officer who has specifically stated in the order passed on February, 8, 1989, that the Government of Tripura has fixed the rate on hiring charges of different account of private vehicles to be used for the ensuring Lok Sabha Election. A look at the provision of 160 of the Representation of the People Act, 1951 will show that even a premises immovable property could be requisitioned, so also a motor or animal for the purpose of any duty in connection with election. Such orders have been passed by the authorities under the Representation of the People Act, 1951 to conduct the election smoothly and fairly in the public interest. There is no intention under the provision of the said Act to acquire any right in the property either on long or short term basis. The idea that a property or vehicle be transferred with the right to use of such property was far from tenor and meaning of the provisions of section 160 of the Representation of the People Act, 1951. The said provision of section 160 has only been passed so that the trucks, motor or jeep operators during the need of the election may not refuse to hire the vehicle to the Chief Electoral Officer. The Central Government passed the said provision of section 160 of the Representation of the People Act, 1951. The said provision of section 160 has only been passed so that the trucks, motor or jeep operators during the need of the election may not refuse to hire the vehicle to the Chief Electoral Officer. The Central Government passed the said provision of section 160 of the Representation of the People Act, 1951. By requisitioning the property under the provision of section 160 no right is being transferred or use of any goods by way of transfer or otherwise. Further urged that at no stage there was only transfer of any property or any right to use the same was given to the respondents. The vehicle remained under the total control and custody of the petitioner through its driver while the same was run for election purposes as per the direction of the election officers. At no stage or at any time the said vehicle in question was transferred in favour of the respondents with a right to use the same for any purpose. There were no document or agreement executed by or between the respondents or the petitioner whereby any transfer of any property or the right to use thereof was given by the operators to the respondents. It was pure and simple a hiring transaction between the petitioner and the respondents and the respondents are bound to pay full hiring charges at the end of the period when the said vehicles were released. The question of payment of any sales tax under the Tripura Sales Tax Act, 1976, does not arise. The amended provision of section 3 or the Tripura Sales Tax Rules, 1989 has no application whatsoever in the instant case. 5. Mr. U. B. Saha, learned Government Advocate on behalf of the respondents strenuously urged that in the facts of the case section 3 of the Tripura Sales Tax Act, 1944 and Tripura Sales Tax Rules, 1989 are applicable. Mr. Saha urged that the petitioner's vehicle were requisitioned by the Government, they enjoyed the control and supervision over the said vehicles and during the period everything were under their control, they could use it for any purpose they wanted. The amended provision of rule 3(A)(2) of the Tripura Sales Tax Rules, 1987 will apply. To understand he provision of the section the same are quoted hereinbelow : "THE TRIPURA SALES TAX (FOURTH AMENDMENT) ACT, 1987 3. Amendment of section 3. The amended provision of rule 3(A)(2) of the Tripura Sales Tax Rules, 1987 will apply. To understand he provision of the section the same are quoted hereinbelow : "THE TRIPURA SALES TAX (FOURTH AMENDMENT) ACT, 1987 3. Amendment of section 3. - (i) In section 3 of the principle Act, after the first proviso to sub-section (1), the following proviso shall be inserted, namely : "Provided further that the rate of tax on any transfer of the right to use any goods for any purpose (whether or not for a specified period) shall be 4 per cent." Subsequently, the rules were framed by the Government of Tripura, Revenue Department on 18th March, 1989. Rule 3(A)(2) of the said rules read as follows : "3(A)(2). Every person responsible for making payment to any person for discharge of any liability on account of valuable consideration payable for any transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash or in any manner, shall at the time of making such payment, deduct an amount equal to four percentum of such sum towards part or, as the case may be, full satisfaction of the tax payable under the Act on account of such transfer of right : Provided that no such deduction shall be made from the bill(s) or invoice(s) of the transferor, - (a) On account of such transfer where the transfer of right to use goods was agreed to before first day of January, 1989; (b) The amounts received as penalty for default in payment or as damages for any loss or any damage caused to the goods by the person to whom such transfer was made; and (c) The amount representing the valuable consideration received for such transfer in respect of goods exempt from tax under sub-sections (2) and (3) of the Act." The argument of Mr. Saha is that in view of the said Rules the present transaction was exigible to sales tax on the hiring of the vehicle to the Election Commissioner by the members of the petitioner. According to Mr. Saha the said Act and Rules cover the case of the petitioner whereby the petitioner is supposed to have transferred the vehicle to the Election Commissioner for the purpose of use of the said vehicle during the election period. Mr. According to Mr. Saha the said Act and Rules cover the case of the petitioner whereby the petitioner is supposed to have transferred the vehicle to the Election Commissioner for the purpose of use of the said vehicle during the election period. Mr. Saha has submitted that the said provisions of the Tripura Sales Tax Act and Rules shall be applicable and also cites the clause (29-A)(d) of article 366 of the Constitution of India read with cause 12. Mr. Saha's argument is that motor vehicle is also a goods or a commodity and he refers to the definition in Black's Dictionary, which reads as follows : "Commodities - Those things which are useful or serviceable, particularly articles of merchandise of any kind, articles of trade or commerce. Movable articles of value, things that are bought and sold. This word is a broader term than merchandise, and, in referring to commerce may include almost any article of movable or personal property. Staples such as weel, cotton, etc., which are traded on a commodity exchange and on which there is trading in future." Besides, Mr. Saha argued that as soon as the property is hired for the purpose of use by the respondents and the respondents used the same according to their own use, the same will be treated as a transfer of the property with a right to use any purpose. Mr. Saha also argued that the property has been transferred and for this purpose Mr. Saha refers to decision of [1989] 75 STC 217 (20th Century Finance Corporation Limited v. State of Maharashtra) wherein the decision of the Bombay High Court considered the provision of article 366(29-A) of the Constitution of India. The Division Bench held : "The transfer of the right to use goods under article 366(29-A)(d) of the Constitution and also under section 2(10) of the Maharashtra Act does not involve a passing of property in the goods. There is distinction between a contract of sale as defined in section 4 of the Sale of Goods Act and transfer of the right to use goods without being accompanied by transfer of ownership in the goods in favour of the hirer. Such a transfer of the right to use goods is a species of bailment. There is distinction between a contract of sale as defined in section 4 of the Sale of Goods Act and transfer of the right to use goods without being accompanied by transfer of ownership in the goods in favour of the hirer. Such a transfer of the right to use goods is a species of bailment. Only upon delivery of the goods, the transferee becomes legally possessed of such goods and entitled to enjoy the use of the goods upon periodic payment or other valuable consideration to the transferor. Since the substance of the right is the enjoyment of the goods, the said transfer is completed only upon the delivery of the goods. The validity of a tax on such transfer of the right to use any goods for any purpose ought not, therefore, to be tested by applying the tests applicable for deciding when property in goods passes as in the case of 'sales' involving passing of property, as defined in the Sale of Goods Act, and as stated in the earlier Supreme Court decisions." 6. I have considered the submission made by Mr. Saha. His argument is sound legally, however, in the facts of this case, according to me, the provision of the Tripura Sales Tax Act as amended from time to time and the amended rules framed thereunder and article 366(29-A) has no application whatsoever. It was not a case where any goods or the right to use the same was transferred in favour of the respondents. The petitioners were forced to give the vehicles on hire at the rate fixed by the State Government for the use of the vehicle by the Election Commissioner. The property is requisitioned does not mean transfer of right to use accrued in favour of the Government bodies without anything further. No attempt was made by the authorities to register such user with the Motor Vehicle Department, inasmuch as of running of a vehicle are controlled by the said provision of the Motor Vehicles Act, 1988 nor any attempt was made to get the vehicle insured under the said Act for the limited period in their name inasmuch as no vehicle can be run by any person without insurance policy. In the absence of any endorsement on the Registration Certificate, i.e., blue book and on the insurance policy the respondent in law cannot acquire any right to ply the said vehicle on roads. Such blue book and policy stood in the name of the operator, as such there was no transfer of the right to use the same for any purpose in favour of the respondents at any stage. In the facts of this case the entire transaction was a transaction of hiring by the authority at a rate fixed on the mileage basis along with the driver and the petrol or diesel was also to be provided by the operators. The rate fixed itself discloses how the money was to be paid to the owner on hire of the vehicle, its driver and fuel for hiring the same. According to me the entire transaction was between a person who has hired the vehicle at a rate fixed and it cannot be stated that the said vehicle was transferred with right to use for any purposes. Even the requisition order does not show, nor it disclose the requisition of the said vehicle for any purpose other than for using the same for the election purpose. Moreover, it is very pertinent to note that the respondent No. 2 while requisitioning the said vehicle did not state that they were taking those vehicle on transfer with the right to use for any purpose, if that were so, question of requisitions the services of operator driver and the cost of fuel to be provided by the owner would not have arisen. 7. The said provision in the Sales Tax Laws have been introduced on the strength of the Constitutional provision of article 366 of the Constitution of India, The said article 366(29-A)(d) reads as follows : "29-A. 'tax on the sale or purchase of goods' includes - (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (c).......... (d) a tax on the transfer of the right to use goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration." 8. (d) a tax on the transfer of the right to use goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration." 8. No incidence of "transfer" of the right to use the vehicle is involved in the requisition order. By the said requisition order the authorities are only forcing the transport operators to assist them for the electoral purposes and to allow their vehicle to be used during the election period on hiring basis with driver and petrol or diesel at rate fixed by the Government. It nowhere got any transfer of the right to use the said vehicle for any purpose whatsoever. The authority did not hand over the blue book or the registration certificate or any fresh endorsement for the right to use is recorded, nor any such recorded, nor any such right to use is recorded in the insurance policy issued by the Insurance Companies. The character of the vehicle being the property of the operators and/or the owners remains and it has neither restricted nor controlled in any way whatsoever. It is the normal business practice of the operators to run the vehicle on the basis of the rate fixed or agreed for any passengers or any person. The character of hiring of the vehicle to the Electoral Officer would not make any change. But vehicle is not only requisitioned, driver of the vehicle were also being asked to assist in running of the said vehicles who is an employee of the operators or the owners. The petrol or diesel is also provided by the operators. As such the operators and/or owners directly control the said vehicles and running of the same through the supervision and control of his driver. In the facts of this case the requisitioned vehicles which were paid on the basis of the rate fixed is pure and simple, a transaction in the nature of hiring or rental charges and nothing else. At no stage any right or interest in the said vehicle involved or vested or transferred to the respondents. The condition precedent to the imposition of tax is the "transfer" of the right to use any goods for any purpose. It is not a tax on right to use or the use of vehicle. It is a tax on "transfer" of the right to use the vehicle. The condition precedent to the imposition of tax is the "transfer" of the right to use any goods for any purpose. It is not a tax on right to use or the use of vehicle. It is a tax on "transfer" of the right to use the vehicle. No materials or facts have been bought to the notice of the court that any of the parties to requisition intended any transfer of the right to use of the vehicles. The respondents have given or forced to give in hire the vehicle for a limited purpose. Like any other hirer on the street may use the vehicle and pay the rental charges at the end of his journey. Similarly, a vehicle can be hired by any person from private sources during the tour for a particular day or days and at the end of the journey accrued hiring charges or halting charges are to be paid to the operators or the owners of the vehicles. In the instant case no transfer of the right to use has been conferred by the petitioners to the respondents inasmuch as the most vital thing relating to transfer of a vehicle for whatsoever limited purpose on the street such as blue book, insurance cover, road tax stood at all times in the names of the operators and/or owners and the said vehicle remained under the control and supervision of the operators and/or owners through its driver who was an employee of the operators. The operator also provided the petrol and diesel for running and using the same. 9. Analysing the above discussion I find that there is not a single incidence of transfer of the motor vehicles or the transfer of the right to the said vehicle is present in the instant case. In my view of the matter the provisions of section 3 of the Tripura Sales Tax Act, 1976 and/or rules framed thereunder have no application whatsoever and the transaction between the operators and owners who are the members of the petitioner had only hired their vehicles to the respondents at the rate fixed and they are entitled to get payment of the same. If however while making payment respondents have deducted any amount alleging that the same being payable to the sales tax authorities under section 3 of the Tripura Sales Tax Act, 1976 read with rule 3(A)(2) of the 1987 Rules, the same are illegal, wrongful, mala fide and the authorities withholding the said amount must pay back the same to the operators and/or owners of the said amount must pay back the same to the operators and/or owners of the said vehicles. Such payment of the balance dues shall be paid with interest at the rate of 18 per cent per annum from the date the said amount was withheld till the payment is made. The respondents are further directed that the said amount along with interest be paid within a period of 6 (six) weeks from the date. 10. The writ application is allowed. Rule is made absolute. There shall be no order as to costs. Writ application is allowed.